I am a Senior Political Contributor at Forbes and the official 'token lefty,' as the title of the page suggests. However, writing from the 'left of center' should not be confused with writing for the left as I often annoy progressives just as much as I upset conservative thinkers. In addition to the pages of Forbes.com, you can find me every Saturday morning on your TV arguing with my more conservative colleagues on "Forbes on Fox" on the Fox News Network and at various other times during the week serving as a liberal talking head on other Fox News and Fox Business Network shows. I also serve as a Democratic strategist with Mercury Public Affairs.

The Great American Retirement Scam: Why The Wealthiest CEO's In America Want To Take Away Your Social Security

As the fiscal cliff debate takes center stage in the national conversation, a well-financed lobbying blitz is underway—one that bills itself as a “non-partisan movement to put America on a better fiscal and economic path.”

Who are these dedicated, do-gooders who want nothing more in life than to save us from plunging over the cliff while solving our national debt problems and return prosperity to all Americans?

Meet the “Fix The Debt” gang—a collection of more than 80 of the nation’s most powerful and wealthy CEO’s who have generously committed their time, money and lobbying efforts to contribute a solution to the nation’s debt crisis in the effort to avoid an economic disaster. And what do these great Americans have in mind as the recipe to cure our national ills?

A plan that leaves it to the poor and middle-class to pay off our burgeoning debt through the scaling back of Social Security, Medicare and Medicaid.

Certainly, there is nothing particularly new about the notion of the 1 percent looking to entitlements as the solution to debt, but these clever executives have added a few wrinkles to the plan that are well worth noticing as these corporate leaders are not simply content to simply lay the debt on the shoulders of those least able to bear it—they intend to make billions in the process.

Their proposal comes complete with ideas ranging from granting themselves some sweet tax breaks via a change in the tax laws that would allow their companies to return overseas profits to the US tax free—instantly dropping some $134 billion to their companies’ collective bottom line—to a well buried benefit that will earn them billions as a direct result of modifying Social Security to delay benefits to the millions who will suffer.

And all of this—they would have us believe—is in the interest of serving their country.

Nice.

So, how does this clever little plan work? Prepare to be amazed. It’s no accident that these 80 individuals are paid the big bucks for running our largest corporations. When it comes to sticking it to the other guy in order to make big money for their side of the bargaining table, these people clearly have no equals.

First, a little background to set the stage—

While only 41 of the companies led by these CEOs even have a retirement plan for their employees (leaving their workers heavily reliant on their Social Security benefits), only 2 of the companies represented in the group are current in their contributions—leaving 39 that have fallen way behind on their employee plan contributions….about $103 billion behind.

Keep that figure in mind as we will return to it shortly.

Also keep in mind that these companies have allowed their employee retirement plans to remain seriously underfunded while managing to continue to put away millions of tax free dollars in their executive retirement plans, all of which appear to be fully funded.

Post Your Comment

Post Your Reply

Forbes writers have the ability to call out member comments they find particularly interesting. Called-out comments are highlighted across the Forbes network. You'll be notified if your comment is called out.

Comments

Mr. Harvison, pensions get underfunded for two primary reasons: 1. Low (and improper) contributions by management, and 2. Unexpectedly poor investment returns from the assets in the plan.

Rick believes that #1 is the primary reason why so many pensions are under-funded today.

I believe that #2 is the primary reason.

Management is responsible for setting a long-term expected rate of return on their pension assets. Generally speaking, the 1980′s and 1990′s were fabulous decades to be an investor. Pension accounts performed well and management expected the “out-performance” to continue. Bad news; the 2000′s arrived with a thud. We had two (yes, TWO) 50+% bear markets in the last 10 years. POOF went the performance!

Corporations big enough to have a pension account are notoriously slow to adjust their expected rate of returns, especially when they have to adjust downward. Why? Because a downward adjustment requires the company to contribute more money to the plan. You know what that means, right? Yes, lower earnings. Lower earnings (usually) means poor stock performance. Poor stock performance means fewer and lower bonuses and few opportunities to cash in lucrative stock options.

I think the companies that can survive this Obama economy will gradually adjust their expected rates of return downward. Contributions will (eventually) step up, and these plans will become actuarially sound once again.

This is why I’m so disappointed with Rick. He doesn’t think it’s “fair” for these companies to bring their foreign profits back home (without being taxed, or being taxed at a much lower level) if they agree to use those proceeds to re-fund their under-funded pension accounts.

Rick does not believe that the problem is solely your number 1. In fact, it is a combination of both 1 and 2. Poor returns that fail to meet the actuarial expectations are, indeed, what put a benefits plan into an underfunded position. However, when this occurs, as it certainly has over the past few years, there are a number of ways to deal with it. The employer provides additional contributions to allow the plan to regain its footing and remain on target to meet the retirement demands that are coming or it hopes that it will somehow be able to do so down the road as the payment obligations become due. The article notes that while the executive retirement accounts at the referenced companies remain healthy, the retirement plans for the remainder of employees remain underfunded. The article also makes the point that by these executives succeeding in raising the SS retirement age, they develop leverage to pursue the extension of the retirement age in their own funds- thus dramatically changing the actuarial assumptions very much to their benefit as the plan is given that much longer to recoup the losses and get back to an even keel without additional employer contribution when the retirement age is reached. This is obvious.

As for your being ‘disappointed’, you are fooling nobody. You will, from time to time, attempt to pretend that you are interested in a rational conversation and then give yourself away by filing comments calling me all sorts of vile names. Sorry, but you can’t have it both ways unless you happen to have a personality disorder. You’re either interested in reasonable debate or you are a troll. Based on the level of ugliness you throw my way, I think it is clear that you are the second…and trolls do not get my attention unless they seek to mislead the other readers as you have done here.

The huge and obvious interest rate repression that our esteemed Fed President Bernanke is instituting is another (big) reason why so many pension funds are under duress. Unless they’re invested in junk bonds, they’re not earning interest. Bernanke is forcing pension managers to play a very dangerous game with this money. My bet is that it won’t end pretty. Things like this never do.

I agree with you on the points you make on extending the retirement age of Social Security benefits.

The age you begin collecting Social Security benefits needs to be adjusted to match mortality tables.

” There has been study upon study as to what he impact of fully funding these plans would have on companies and, ore specifically, the level of their profits. ”

Too bad you don’t mention the study showing that we could tax everyone making over $66k/year at 100% and we we wouldn’t make a dent in the TENS OF TRILLIONS OF UNFUNDED LIABILITIES that go to Medicaid, SS, etc. Every year SEVEN TRILLION gets rolled into that number ON TOP OF THE DEBT that Odumbo wants to raise again, on top of the BS taxes he wants to raise while REFUSiNG to cut ANYTHING.

If I were you, I’d stop worrying about a handful of handful CEOs (most of whom have their lips pressed against Obama’s posterior) and START worrying about the TENS OF MILLIONS OF US with pitchforks coming after YOU and OBAMA and BOEHNER when you break the system completely. You think the Tea Party looked scary when you first saw it?

I didn’t think the Tea Party looked scary when I first saw it. I know you’re all into the macho ‘pitchfork’ thing, but this country is better than that. Apparently, you haven’t gotten the memo. I support changes in the entitlements and on record as saying so. Everyone knows that it will take a combination of revenue increases and cuts to get this done. You know what it doesn’t take? Angry people like you who haven’t figured out that calling the President “Odubmo” and threatening to come after me with a pitchfork just make you look silly.

Sadly, nothing in this article surprises or particularly angers me–after a while the anger seems somewhat pointless, exhausting and unproductive.

What is even sadder is that you can pretty much figure that the federal government will end up making up the deficit in the underfunded pension plans–while still not paying out the contracted obligation of the employer–but we will lambaste the Federal government for this for a variety of reasons, screaming about bailouts, about unfunded liabilities, about an even larger deficit–but we won’t blame the original source of the problem.

If you make a contractual obligation, fullfill it. If you did this to another corporation rather than your employees, there would be legal issues–but, once again, we see that employees don’t actually count or matter, if we can avoid the responsibility long enough to get out with our own golden parachute.

People always take about the redistribution of wealth and it is always portrayed as being an undeserved taking from the rich by the poor… and they ignore the original redistribution that moved it from the poor to the rich in the first place–how else did a small percentage of the population end up with the majority of the wealth?

People talk about takers and makers–yet the makers they are constantly referring to usually don’t actually MAKE anything. They use their capital to enable others to make things and/or they pay taxes to enjoy services such as national defense, police, and a transportation/communication infrastructure and the rule of law–and while the people that do many of those things don’t MAKE anything either, they provide a useful and NECESSARY societal function (plus, because they ARE employed, they also pay taxes and buy things)–just as providing capital IS a useful and necessary societal function.

Are there people who game the system? Yes, at all levels, rich, poor and in-between. The poor generally get lambasted for it more because they aren’t particularly articulate, don’t have much of a media presence (its tougher to have one when you don’t have the money to pay for it) or lawyers, politicians and accountants to keep it hidden.

Until all the hyperbole stops and until people recognize that we ARE a society and that we AREN’T solely responsible for our success (or failure) and that helping someone else helps society at large, we will continue down the path of ultimate financial and economic collapse that is coming to this country–that the poor will be stuck with and that many of the rich will ultimately escape in some fashion, anyway.

Sorry, my bit or rant and hyperbole for the day–I guess I still do get angry, after all ;)

Thanks for animadverting about this, Rick. At first glance, I had trouble believing what you claimed; I then read the study, and there is now no doubt in my mind.

With that said, the eligibility age for SS and Medicare should be raised, so as to adjust for increased life expectancy and help alleviate our debt. I’ll leave the specifics for those who are more versed in this area, but the underlying logic remains the same.

Keep it coming Rick!!! I am really shocked how naive or maybe just plain selfish people are. I wonder if they even realize why social security was created and if they have any idea or simply don’t care where we would be as a country with out them.